Update: Susser Holdings Earnings

Summary

The company beat 2Q consensus on the top line but missed on the bottom line.

We can’t fight the fact that there’s an acquisition in the works, which flaws our bear thesis.

We were wrong about this quarter, but its acquirer could become quite the play in the convenience store and fuel market.

Susser Holdings (NYSE:SUSS) managed to post 2Q earnings that were $0.66 a share (coming in well below $0.93 consensus) and revenues were $1.87 billion (marginally beating consensus). The company had same-store merchandise sales up 4%, compared to 2.2% in 2Q 2013. It also noted that its Laredo Taco Company was a key driver of its same-store performance.

Shares are up 60% since our article from last September. We liked the company but weren't a fan of the valuation. As we noted back then,

Although the company does have the opportunity to expand quicker having spun off its distribution business, and it has a unique business model that includes operating restaurants, the stock has already seen a nice run up since the spinoff.

But valuation doesn't matter when you have an acquisition offer. Energy Transfer Partners (NYSE:ETP) is paying a 40% pre-announcement premium to buy Susser.

The move gives Energy Transfer a chance to spin out its retail marketing business. That's what they'll use Susser Petroleum Partners (the MLP) for. The company has the opportunity to expand its footprint with Susser's Texas locations.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More...)The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

We only use your contact details to reply to your request for more information.We do not sell the personal contact data you submit to anyone else.

Thank you for your interest in Seeking Alpha PROWe look forward to contacting you shortly for a conversation.

Thank you for your interest in Seeking Alpha PRO

Our PRO subscription service was created for fund managers, and the cost of the product is
prohibitive for most individual investors.
PRO Alerts is our flagship product for individual investors who want to be faster
and smarter about their stocks. To learn more about it, click here.
If you are an investment professional with over $1M AUM and received this message
in error, click here and you will be contacted shortly.

Thank you for your interest in Seeking Alpha PROWe look forward to contacting you when we have an individual investor product ready!